Counterparties: Not so golden, still delicious
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Appleâs stock is down 23% in the last six months. Last weekâs earnings report caused an overnight drop in shares from $514 to $461. Earnings growth is decreasing. Investor Jeff Gundlach thinks itâs a âbroken companyâ where innovation has been reduced to âjust changing the size of… productsâ. Fast Company explains âWhy Apple is losing its auraâ while the WSJ asks âHas Apple Lost its cool to Samsung?â
Not so fast. Legendary VC Michael Moritz, who first bought Apple equity in 1978, has stepped into the doomsaying to decry the lack of âany sense of perspectiveâ. Quarterly revenues, he notes, grew 18%, and topped $50 billion for the first time. And while Apple does face stiff competition, itâs only because it is so successful:
Almost every company in the world suffers from acute Apple envy. Apple has thrown several mainline industries, including music, movies, television, publishing, cameras and 35mm film, into convulsions… It is difficult to think of a company of the past 50 years whose influence and ingenuity have been as profound or widespread.
John Abell voices the nagging concern that Apple just doesnât tell shareholders enough about what itâs up to. Thatâs really nothing new: Steve Jobs was notoriously hostile to shareholders, and seemed to relish ignoring them. Tim Cook hasnât changed tack.
Itâs not just more information some Apple shareholders want — theyâd like management to be fixated on the stock price. In practice, that seems to mean a monomaniacal preference for buybacks as far as they eye can see, rather than investments in product development or the companyâs supply chain. But Appleâs view on this issue wonât change: Jobs ignored Warren Buffetâs advice to use cash to buy back stock.
The difference between a CEO obsessed with products and an investor obsessed with finance, is the difference between Apple and Berkshire Hathaway. In turn, that might help explain why, as Farhad Manjoo writes, âthe market attitude toward Apple seems unmoored from its actual performanceâ. — Ben Walsh
On to todayâs links: